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Exam 5: Business Formation: Choosing the Form That Fits

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Question 21

Multiple Choice

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Compared to a sole proprietorship,what would be a major advantage of a general partnership?

A) It is considered to be a permanent business organization.
B) It would be able to completely avoid the problem associated with unlimited liability.
C) It would be able to take advantage of complementary skills and shared workload.
D) It is easier and less expensive to form.

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Question 22

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Sole proprietorships make up what percentage of all registered businesses?

A) 5%
B) 70%
C) 25%
D) 95%

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Question 23

Multiple Choice

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Historically,what have been the three basic forms of business ownership in Canada?

Liza owns 1000 shares of common stock in Bigbux Inc.As a shareholder in the company,she may vote in the election of Bigbux's board of directors.

What is the most common type of franchise agreement?

Justin Rolando decided to operate his own Web design firm and is leaning toward organizing it as a sole proprietorship.What is one factor Justin should realize in choosing this form of business?

Which of the following is a legal entity created by permission of a provincial or federal government?

A limited partnership is an agreement between two or more individuals to operate a business as co-owners for a limited period of time.

Which term describes the shareholders of a corporation,who have the right to vote on issues affecting the operation of the business?

In a limited partnership,all owners have limited liability for the debts and obligations of their company.

Allison Peterson has opened a new downtown boutique.She wants to pay minimal taxes and she wants to remain in complete control of her company and be her own boss.What form of ownership should she choose?

Mike's Motorcycles Inc.has just incorporated the business in Ontario.If John Littleton had been a partner,what would he now become?

Unlike general corporations,not-for-profit corporations have no shareholders and pay no dividends.

For the franchisee,what are the advantages of a franchise arrangement?

What does a not-for-profit corporation enjoy the benefit of?

Which of the following can be classified as an artificial person that can legally engage in almost any business activity a natural person can,including own property,enter into binding contracts,and initiate legal actions?

A franchise agreement is the contractual arrangement between a franchisor and franchisee that details the duties and responsibilities of both parties.

Fly By Knight and Air Pockets are two mid-sized regional airlines that serve much the same territory.If these two airlines merged,the result would be a horizontal merger.

Not-for-profit franchise organizations are creating opportunities for not-for-profit organizations seeking creative fundraising options.From the franchisor's perspective,what is the advantage of having not-for-profit organizations become franchisees?

Individuals who contribute money or property to a not-for-profit organization can take a tax deduction,making it easier for these organizations to raise funds from donations.